LO.5 An entity engages in the following transactions during the taxable year:

• Sells stock held for four years as an investment for $50,000 (adjusted basis of

$28,000).

• Sells land used in the business for $70,000. The land has been used as a parking lot and originally cost $50,000.

• Receives tax-exempt interest on municipal bonds of $9,000.

• Receives dividends on IBM stock of $75,000.

Describe the effect of these transactions on the entity and its owners if the entity is:

a. A partnership.

b. A C corporation.

c. An S corporation.